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Geoffrey P Martin

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Full-Text Articles in Business

Ceo Equity Risk Bearing And Strategic Risk Taking: The Moderating Effect Of Ceo Personality, Mirko Benishke, Geoffrey P. Martin Dr, Lotte Glaser Nov 2019

Ceo Equity Risk Bearing And Strategic Risk Taking: The Moderating Effect Of Ceo Personality, Mirko Benishke, Geoffrey P. Martin Dr, Lotte Glaser

Geoffrey P Martin

We draw upon applied psychology literature to explore inter-agent differences in perceived risk to their equity when making strategic risk decisions. Our theory suggests behavioral agency’s predicted negative relationship between equity risk bearing and strategic risk taking is contingent upon four personality traits. Our empirical analyses, based on personality profiles of 158 CEOs of S&P 1,500 firms in manufacturing industries, indicates the relationship between executive risk bearing and strategic risk taking crosses from negative to positive for high extraversion, greater openness and low conscientiousness. These findings demonstrate that agency based predictions of CEO risk taking in response to compensation – …

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1 Behavioral Agency And Affect.Docx, Geoffrey P. Martin Dr, Leon Zolotoy, Don O'Sullivan Feb 2019

1 Behavioral Agency And Affect.Docx, Geoffrey P. Martin Dr, Leon Zolotoy, Don O'Sullivan

Geoffrey P Martin

We advance behavioral agency theory by exploring the influence of mood or “affect” on the behavioral consequences of equity incentives. Drawing on insights from psychology and behavioral decision theory, we describe how affect influences agent risk behavior. We argue that positive affect amplifies both the extent to which executives reduce strategic risk taking in response to risk bearing and engage in strategic risk taking in response to incentives for further enrichment. Building again on the psychology literature, we describe how CEO accountability attenuates the influence of affect on CEO risk behavior in response to equity incentives. We test our expectations …

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Behavioral Agency And Social Norms.Docx, Don O'Sullivan, Leon Zolotoy, Geoffrey P. Martin Dr Jul 2018

Behavioral Agency And Social Norms.Docx, Don O'Sullivan, Leon Zolotoy, Geoffrey P. Martin Dr

Geoffrey P Martin

Drawing on arguments from institutional theory, this study examines how social norms—specifically, local religious social norms—affect the motivational impact of equity-based incentives. We test our model using longitudinal data on local religious norms, CEO equity incentives and firm value. Consistent with our theoretical predictions, we find that local religious social norms attenuate the impact of CEO option incentives upon firm value.  Furthermore, we find that the attenuating impact of local religious social norms increases with managerial discretion. These findings provide valuable insight for human resource professionals and boards aiming to design compensation contracts that are aligned with firm goals. Our …

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Ceo Risk-Taking And Socioemotional Wealth: The Behavioral Agency Model, Family Control, And Ceo Option Wealth, Luis Gomez-Mejia, Ionela Neacsu, Geoffrey P. Martin Dr Dec 2017

Ceo Risk-Taking And Socioemotional Wealth: The Behavioral Agency Model, Family Control, And Ceo Option Wealth, Luis Gomez-Mejia, Ionela Neacsu, Geoffrey P. Martin Dr

Geoffrey P Martin

We combine behavioral agency and family business literature to analyze the role of dominant firm principals in constraining the managerial agent’s (CEO’s) response to equity-based pay. Behavioral agency research has made progress in understanding CEO risk behavior in response to equity-based incentives and family firm risk behavior driven by concentrated socioemotional and financial firm-specific risk bearing. However, both literatures have evolved independently, which has limited our understanding of how the risk bearing of agent and principal influence the predictions of the behavioral agency model (BAM). We combine these literatures in order to enhance BAM’s predictive validity with regard to firm …

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The Interactive Effect Of Monitoring And Incentive Alignment On Agency Costs, Geoffrey P. Martin Dr, Robert M. Wiseman Dr, Luis R. Gomez-Mejia Dr Nov 2017

The Interactive Effect Of Monitoring And Incentive Alignment On Agency Costs, Geoffrey P. Martin Dr, Robert M. Wiseman Dr, Luis R. Gomez-Mejia Dr

Geoffrey P Martin


The effectiveness of monitoring and incentive alignment as mechanisms for controlling agency costs have been explored separately and in combination, with monitoring substituting for weaknesses in incentive alignment and vice versa; this equates to positive substitution when describing how monitoring and incentive alignment interact to influence shareholder agency costs. We draw upon behavioral agency theory and findings from finance research to offer further theoretical insight into how these mechanisms interact to influence agency costs. Our results suggest that CEO earnings management aimed at preserving their equity wealth (an incentive alignment mechanism) is accentuated by higher levels of concentrated institutional ownership, …

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The Two Sides Of Ceo Pay Injustice: A Power Law Conceptualization Of Ceo Over And Underpayment, Herman Aguinis, Geoffrey P. Martin Dr, Luis R. Gomez-Mejia Dr, Ernest H. O'Boyle, Harry Joo Dec 2016

The Two Sides Of Ceo Pay Injustice: A Power Law Conceptualization Of Ceo Over And Underpayment, Herman Aguinis, Geoffrey P. Martin Dr, Luis R. Gomez-Mejia Dr, Ernest H. O'Boyle, Harry Joo

Geoffrey P Martin

Purpose - The goal of our study was to examine the extent to which CEOs deserve the pay they receive both in terms of over as well as underpayment.
Design/methodology/approach – Rather than using the traditional normal distribution view in which CEO performance clusters around the mean with relatively little variance, we adopt a novel power law approach. We studied 22 industries and N = 4,158 CEO-firm combinations for analyses based on Tobin’s Q and N = 5,091 for analyses based on return on assets. Regarding compensation, we measured the CEO distribution based on total compensation and three components of …

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The Relationship Between Socioemotional And Financial Wealth: Re-Visiting Family Firm Decision Making, Geoffrey P. Martin Dr, Luis Gomez-Mejia Dec 2016

The Relationship Between Socioemotional And Financial Wealth: Re-Visiting Family Firm Decision Making, Geoffrey P. Martin Dr, Luis Gomez-Mejia

Geoffrey P Martin

A growing volume of family rm literature has argued that the preservation of family socioemotional wealth takes precedence over the pursuit of financial goals. The purpose of this paper is to develop a conceptual framework that builds knowledge regarding the two-way relationship between socioemotional and financial forms of wealth, to develop a more complete theory of wealth concerns that may inform family rm decision-making.

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Conflict Between Controlling Family Owners And Minority Shareholders: Much Ado About Nothing, Geoffrey P. Martin Dr, Luis R. Gomez-Mejia Prof, Marianna Makri, Pascual Berrone Nov 2016

Conflict Between Controlling Family Owners And Minority Shareholders: Much Ado About Nothing, Geoffrey P. Martin Dr, Luis R. Gomez-Mejia Prof, Marianna Makri, Pascual Berrone

Geoffrey P Martin

We examine the unique nature of conflict between controlling family owners and minority shareholders (principal-principal conflict) in publicly traded family controlled firms through examining shareholder proposals. Implicit in prior governance and family business research has been that non-family shareholders are likely to be in conflict with the dominant family owners. In general, we find that much of this fear may be unwarranted except under specific circumstances. Our findings elucidate sources of heterogeneity in family firm principal-principal conflict and add greater nuance to our understanding of this type of agency problem within family firms.

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Amp Bridging Finance And Behavioral Scholarship On Agent Risk Sharing And Risk Taking, Geoffrey P. Martin, Luis R. Gomez-Mejia Prof, Robert M. Wiseman Nov 2016

Amp Bridging Finance And Behavioral Scholarship On Agent Risk Sharing And Risk Taking, Geoffrey P. Martin, Luis R. Gomez-Mejia Prof, Robert M. Wiseman

Geoffrey P Martin

A large volume of research has examined agent risk taking and the contracting problem of risk sharing – the sharing of performance risk across agent and principal – to advance our knowledge of mechanisms that can align the assumed divergent interests and risk preferences of the managerial-agent and shareholder-principal. This research has been undertaken in two research streams that appear to have operated in silos, utilizing different theoretical frameworks and methodological approaches: financial economics and behavioral science. We review the theoretical paradigms and empirical findings deriving from both fields in order to identify opportunities for cross-fertilization and to advance future …

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Going Short-Term Or Long-Term? Ceo Stock Options And Temporal Orientation In The Presence Of Slack, Geoffrey P. Martin Dr, Robert M. Wiseman Dr, Luis R. Gomez-Mejia Dr Dec 2015

Going Short-Term Or Long-Term? Ceo Stock Options And Temporal Orientation In The Presence Of Slack, Geoffrey P. Martin Dr, Robert M. Wiseman Dr, Luis R. Gomez-Mejia Dr

Geoffrey P Martin

We draw on behavioral agency theory to explain how decision heuristics associated with CEO stock options interact with firm slack to shape the CEO’s preference for short or long-term strategies (temporal orientation). Our findings suggest CEO current option wealth substitutes for the influence of slack resources in encouraging a long-term orientation, while prospective option wealth enhances the positive effect of slack on temporal orientation. Our theory offers explanations for non-findings in previous analysis of the relationship between CEO equity based pay and temporal orientation and provides the insights that CEO incentives created by stock options: (1) enhance the effect of …

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Family Control, Socioemotional Wealth And Earnings Management In Publicly Traded Firms, Geoffrey P. Martin Dr, Joanna Campbell Dr, Luis R. Gomez-Mejia Prof Dec 2014

Family Control, Socioemotional Wealth And Earnings Management In Publicly Traded Firms, Geoffrey P. Martin Dr, Joanna Campbell Dr, Luis R. Gomez-Mejia Prof

Geoffrey P Martin

We examine the unique nature of agency problems within publicly traded family firms by investigating the earnings management decision of dominant family owners relative to non-family. To do so, we draw upon literature demonstrating that family owners are loss averse with respect to the family’s socioemotional wealth (SEW), or the affective endowment derived from firm ownership and control. Our theory and findings suggest that potential reputational consequences of earnings management lead family principals to engage in less of this practice relative to non-family firms, and that founder family firms are less likely than non-founder family firms to use earnings management. …

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Interlocks And Firm Performance: The Role Of Uncertainty In The Directorate Interlock-Performance Relationship, Geoffrey P. Martin Dr, Remzi Gozubuyuk Dr, Manuel Becerra Dr Dec 2013

Interlocks And Firm Performance: The Role Of Uncertainty In The Directorate Interlock-Performance Relationship, Geoffrey P. Martin Dr, Remzi Gozubuyuk Dr, Manuel Becerra Dr

Geoffrey P Martin

We examine how uncertainty influences the performance effects of directorate interlocks. Our study offers a new perspective of directorate interlocks as mechanisms that enable firms to improve performance when confronted with greater uncertainty, suggesting that uncertainty positively moderates the interlock-performance relationship. This contrasts with the view based on resource dependence theory suggesting networks reduce uncertainty and enhance firm performance, implying that uncertainty mediates the interlock effect upon performance. Using a sample of 3,745 firms across manufacturing industries in U.S. during the period 2001 to 2009, we find support for the moderation argument and less convincing support for mediation, suggesting that …

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Socioemotional Wealth As A Mixed Gamble: Revisiting Family Firm R&D Investments With The Behavioral Agency Model, Luis R. Gomez-Mejia Dr, Joanna Campbell Dr, Geoffrey P. Martin Dr, Marianna Makri Dr, David Sirmon Dr, Robert Hoskisson Dr Dec 2013

Socioemotional Wealth As A Mixed Gamble: Revisiting Family Firm R&D Investments With The Behavioral Agency Model, Luis R. Gomez-Mejia Dr, Joanna Campbell Dr, Geoffrey P. Martin Dr, Marianna Makri Dr, David Sirmon Dr, Robert Hoskisson Dr

Geoffrey P Martin

Theoretical explanations for family firm under-investment in R&D relative to non-family firms remain nascent. We revisit this question using a refinement to the behavioral agency model (BAM) – the mixed gamble – that allows us to examine the socioemotional trade-offs that R&D represents for the family firm and how this differentiates their R&D investment decision from non-family firms. We do so in an empirical context where R&D investment is of greatest importance – high technology industries. Moreover, we examine three contingencies that allow us to explore heterogeneity across family firms in their R&D decisions due to their effect upon the …

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Not All Risk Is Born Equal: The Behavioral Agency Model & Firm Efficacy, Geoffrey P. Martin Dr, Nathan T. Washburn Dr, Marianna Makri Dr Dec 2013

Not All Risk Is Born Equal: The Behavioral Agency Model & Firm Efficacy, Geoffrey P. Martin Dr, Nathan T. Washburn Dr, Marianna Makri Dr

Geoffrey P Martin

We examine the relationship between agent (CEO) risk bearing and the quality of executive risk taking outcomes, by examining the contingency effect of CEO perceived firm efficacy. In doing so, we extend the behavioral agency model (BAM) beyond predictions of risk magnitude to examining how CEO risk taking outcomes differ qualitatively in response to risk bearing. We argue that CEO risk bearing (due to stock options or cash compensation) will positively influence performance outcomes in the presence of higher perceived firm efficacy. However, this positive influence reverses when efficacy is lower. We demonstrate the utility of firm efficacy in exploring …

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Executive Stock Options As Mixed Gambles: Re-Visiting The Behavioral Agency Model, Geoffrey P. Martin, Robert M. Wiseman, Luis Gomez-Mejia Mar 2013

Executive Stock Options As Mixed Gambles: Re-Visiting The Behavioral Agency Model, Geoffrey P. Martin, Robert M. Wiseman, Luis Gomez-Mejia

Geoffrey P Martin

Conceiving of stock options as providing the CEO with cues for the possibility of both greater prospective wealth and losses to current wealth, we re-visit predictions of the behavioral effects of equity based pay using the Behavioral Agency Model (BAM). We refine BAM’s original formulation and provide an explanation for previous conflicting empirical results by theorizing that the anticipation of prospective wealth attenuates the negative effect of accumulated current equity wealth upon CEO strategic risk taking. In doing so, we offer an advancement of the dialectic between: (1) classical agency scholars, arguing that equity based pay leads to more risk …

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Lifecycle Of Ceo Compensation, Geoffrey P. Martin, Luis Gomez-Mejia, Robert M. Wiseman Oct 2012

Lifecycle Of Ceo Compensation, Geoffrey P. Martin, Luis Gomez-Mejia, Robert M. Wiseman

Geoffrey P Martin

CEO equity based pay creates incentives for both more or less risk taking. Some firms may inadvertantly create incentives for careless risk taking leading to unintended consequences. We provide examples of three firms and their CEOs risk incentives.

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